How Much Foreign Direct Investment Does China Get?

That number actually seems a little bit low, doesn’t it? Perhaps we have all been overwhelmed by the amount of reports about foreign direct investment surging into China, as 30% of the FDI for all developing countries just doesn’t seem like much. This translated from this week’s Modern Weekly:

China’s Share of Foreign Direct Investment

It is estimated that China will receive 30% of the US$250 of foreign direct investment forecast to pour into developing countries from 2006-2010. But 20-30% isn’t ‘real’ FDI – it’s money funneled abroad and back again by mainland Chinese investors who want to enjoy more favorable tax and investment policies.

The numbers above also show how little foreign direct investment has come to matter to China – with a foreign account surplus well in excess of $1 trillion dollars, the Chinese government can at any time stem the outflow of US$15-20 billion per year in FDI mentioned about above.